A store employee prepares upcoming freebies for all Cyber Monday purchases via warehouse.

The big online shopping vacation is taking place amid a shortage of stores in the United States as vacancy rates in malls are at full-time lows. According to the commercial property service company JLL, almost 96% of the existing industrial space is used.

JLL estimates the United States may need an additional billion square feet of new industrial space to meet demand by 2025.

“The industry will effectively sell itself over the next year or so,” said Chris Caton, managing director of global strategy and analytics for Prologis.

Rents are still at a high level and explode at pre-lease prices, i.e. when warehouses are rented out before the end of construction.

“The lease amount in some cases is nearly three times what is built each year,” said Mehtab Randhawa, JLL’s senior director of industrial research for America.

For example, an additional 190 million square feet of warehouse space was built in North America in 2020, with more than 43% of the buildings pre-leased, according to CBRE.

This demand is being driven by retailers doing e-commerce business during the online shopping boom and investing in faster delivery driven by consumer expectations. Retailers are also gaining more storage space in the US to help mitigate the impact of future shocks in the supply chain similar to those caused by the coronavirus pandemic.

In addition, e-commerce and logistics take-up three times as much space as retail.

The expansion of the warehouse transformed the local economy, like that of Lehigh Valley, Pennsylvania.

The rapid growth has led to controversy over land use as the retail boom accelerates the supply of land.

“Our people … are very angry with the warehouses and I am very angry with the trucking traffic they generate,” said Lamont McClure, Northampton County manager.

This is causing industrial developers to get creative and find more funky places like Lehigh Valley Water Park and Diving Center if they want to keep the building.

Stuart Schooley of Lehigh Valley said he and his friends tried to stop the construction of the first warehouse on his street.

“We realized we couldn’t stop him … [and he started] walking camp after camp. We were the last property, “Schooley, owner of Dutch Springs, a dive center and water park in the Lehigh Valley.

Schooley is now selling the land so he and his wife Jane can retire.

Real estate developer Trammell Crow is buying the property and wants to build two warehouses on the property.

“We made it very welcome, and the woodworm is on, especially in places like Lehigh Valley where I think people feel if it’s enough, enough?” Andrew Mele, general manager of Trammell Crow’s Northeast Metropolitan Division, said.

What do all of these businesses mean for American consumers and businesses from Wall Street to Main Street?

Translate »